Federal Government Cuts ties, Budget Subsidies


The House of Federation (Hof) decided to stop any relationship the federal government has with the Tigray regional state assembly and the region’s highest executive body.

The Federation that also cut budget subsidies to the state banned all federal institutions from sending letters and information to Tigray’s higher executive bodies, providing support to their institutions and prohibiting the region from participating in national level forums.

According to The Speaker of the House of Federation, Aden Farah, who spoke to Ethiopian Broadcasting Corporation (EBC), the Federation took the decision as it deemed the cabinet lacking a legal personality.

The speaker argued that since the ruling party, Tigray People Liberation Front (TPLF), didn’t comply with the house’s decision to extend the existing regional parliament, the newly elected parliament is illegal and unconstitutional.

Though the federal government postponed the national and regional elections because of the coronavirus pandemic, the Tigray Regional state leaders went with their own election with the TPLF securing 189 of 190 seats.

However, it was noted that the now cut ties between the federal government and Tigray leaders do not entail a complete rupture. The federal government would continue to work with local institutions at Kebele, Woreda, and city level to provide “basic development and security services” to the region, overseen by a committee to be set up.

“This is possible because of our respect for the people of Tigray and from the firm belief that the people should get the benefit as the rest of the country,” said the house of the speaker.

The Ethiopian taxations system gives superior power to the Federal government when it comes to collecting and allocating taxes. And since a significant amount of capital flows to the Federal government, regional states are given support in budget subsidies.

The existing budget subsidy formula to the regional states has been developed based on quantitative assessment of the population size, the relative expenditure needs, and revenue-raising potentials of the regions.

It is to be recalled that the Ethiopian parliament, in 2019, decided to revise the existing budget subsidy allocation formula, which has been in place for the last 23 years.

The total budget allocated to the Tigray in 2019/20 was 8.3 billion birr and the amount was only last to Afar Regional State.